Event: the company released the 2022 China report, the income in the first half of the 21-22 academic year was 1.527 billion (yoy+29%), and the adjusted return profit was 453 million yuan (yoy-17.06%). The profit decline was mainly caused by non-recurrent income and increased investment in running a school.
The enrollment network continues to expand, and income maintains rapid growth. The income of 22H1 is 1.527 billion yuan (yoy+29%). The income growth is mainly due to the continuous expansion of the enrollment network of colleges and universities, which drives the increase in the size of students. There are 232000 students in 22H1 (yoy+17.95%). Under the pressure of undergraduate transfer, the enrollment is steady, with 82600 new students (yoy+15%). 22 with a per capita income of 6578 yuan (yoy+9.36%) in the first half of the year, tuition fees have been improved with the improvement of the quality of running schools.
Based on the strategy of giving priority to quality, efforts should be made to increase investment in running schools. 22H1 colleges and universities adhere to the connotation construction, pay attention to the quality of running schools, the expenditure on expansion reaches 1.549 billion yuan (yoy+67%), and the expenditure on teaching reaches 585 million yuan (yoy+41%), of which the classroom salary expenditure is 388 million yuan (yoy+48%). The overall increase in the cost of 22H1 colleges and universities, the successful acquisition of 6 colleges and universities, the construction of 82 new training centers, the completion of 5 provincial first-class undergraduate professional sites, the 22H1 sales expense rate of 8.61% (yoy+1.7pct), the management expense rate of 12.82% (yoy+3.13 pct), and the financing cost rate of 8.58% (yoy-0.97pct) are mainly due to the decline in the scale of group loans.
Colleges and universities at home and abroad cooperate to develop and broaden the incremental space. The average number of students in the 19 colleges and universities in the territory is only 11000, the utilization rate of beds is about 86.8%, and the utilization rate of land is 55%. The land reserved in advance increases sufficient endogenous space for colleges and universities. The enrollment market of overseas colleges and universities continues to expand. The enrollment growth rates of Yingdi International University of Malaysia and Shinawatra University of Thailand under 22H1 Group are 43% and 24% respectively. In the future, it will develop in coordination with domestic colleges and universities, and the enrollment scale will increase strongly. The adjusted net profit of 22H1 institutions reached 453 million (yoy-17.06%), mainly due to the 179 million yuan impairment loss of 21H1. Excluding Yinchuan energy impairment, the net profit of write-off increased by 23.61% compared with the same period last year, mainly from endogenous growth and epitaxial mergers and acquisitions, in line with expectations.
There is plenty of room for endogenous growth in the company, and short-term increase in cost investment suppresses profit release. We expect revenue of 29.67 shock 3475 million for 22-24 (2.851 billion yuan for 23x24) and adjusted net profit of 1.075 billion (1.041.65 billion yuan for 23x24e). The 22-year comparable company has an adjusted average PE of 6x, corresponding to a market capitalization of HK $5.09 billion and a target price of HK $0.64, maintaining a "buy" rating.
Risk hint
M & An integration is less than expected; input costs of teachers and equipment are higher than expected